After Microsoft on Thursday announced record revenue of $17.37 billion, analysts quickly voiced concerns over the news that revenue from the company's Windows division declined 2 percent in fiscal 2011.

The Redmond, Wash., Windows maker drew a muted response to the revelation of 8 percent year over year growth and net profit of $5.87 billion during its fourth quarter of fiscal 2011. For the full fiscal year, which ended on June 30, the company reported $69.94 billion in revenue, up 12 percent from 2010.

"Throughout fiscal 2011, we delivered to market a strong lineup of products and services which translated into double-digit revenue growth, and operating margin expansion, said Peter Klein, chief financial officer for the company. Our platform and cloud investments position us for long-term growth.

Analysts, however, were skeptical over the long-term likelihood of Microsoft's growth, honing in on the fact that its Windows business declined 1 percent in the fourth quarter and 2 percent for the fiscal year. However, the company asserted that, excluding the impact of last year's Windows 7 launch and revenue deferral, Windows growth was in line with the overall PC market growth of 2 percent to 4 percent.

Despite a 16.25 percent increase in sales, Microsoft's online services unit, which has bled almost $6.5 billion dollars over the past three years, posted a loss of $728 million, compared to a loss of $688 million a year ago.

"All eyes are on Windows and how they are ultimately going to extend this franchise in the future, as the PC business continues to lose share to the tablets," Reuters reported Edward Jones analyst Josh Olson as saying. "Microsoft is really a show-me story in terms of its ability to extend its core flagship products to these new growth platforms."

"These numbers are good. The question is, what will make Microsoft break this range in which it is stuck, between $25 and $28?" said Trip Chowdhry, managing director at Global Equities Research. "I don't see these numbers giving an indication that the stock is going to break away."

Shares of Microsoft remained flat in after-hours trading. Since the beginning of the year, the stock is down 2.71 percent.

Even as Apple's iPad has eaten into PC sales, Microsoft is betting that the next version of Windows will reverse the trend. Instead of opting to design an operating system specifically for tablets, the company has said it "views a tablet as a PC" and plans to bring Windows "everywhere on every device without compromise."

The company's results comes as a stark contrast to Apple's blowout performance in the June quarter. The Cupertino, Calif., company posted $28.57 billion in revenue and a 125 percent leap in profits to $7.31 billion, nearly 25 percent more than its rival's profits. It was just last quarter that Apple beat Microsoft's profits for the first time in decades.

I'd bet that 2% Windows revenue decline still meant an increase in Windows net profit seeing how much of the R&D is already accounted for. Still, I think it's not something we've seen before with MS and may be the start of a long and unfruitful trend.

Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"

If I was the CEO of Microsoft, I'd realize that success with the iPad did not come from trying to cram OS X onto it. They used iOS, and that's why Microsoft needs to put their Windows Mobile 7 OS on tablets. I think the Metro GUI is a great for post PC devices. Having said that, I drank too much Apple Kool-aid and I'm staying with iOS devices. Android, Palm, Blackberry, and Microsoft anything can kiss my ass.

I'd bet that 2% Windows revenue decline still meant an increase in Windows net profit seeing how much of the R&D is already accounted for. Still, I think it's not something we've seen before with MS and may be the start of a long and unfruitful trend.

I imagine the > $1 Billion in Patent licensing taxes are giving Microsoft a sigh of relief. Without them even more analysts would downgrade them.

If I was the CEO of Microsoft, I'd realize that success with the iPad did not come from trying to cram OS X onto it. They used iOS, and that's why Microsoft needs to put their Windows Mobile 7 OS on tablets. I think the Metro GUI is a great for post PC devices. Having said that, I drank too much Apple Kool-aid and I'm staying with iOS devices. Android, Palm, Blackberry, and Microsoft anything can kiss my ass.

And more importantly, it's 5 years of R&D upon which Microsoft will have to catch up.

If I was the CEO of Microsoft, I'd realize that success with the iPad did not come from trying to cram OS X onto it. They used iOS, and that's why Microsoft needs to put their Windows Mobile 7 OS on tablets. I think the Metro GUI is a great for post PC devices. Having said that, I drank too much Apple Kool-aid and I'm staying with iOS devices. Android, Palm, Blackberry, and Microsoft anything can kiss my ass.

Windows 8 has the metro UI for touch.

People need to realize Win8 isn't just Win7 on touch devices. There's two distinct user modes: Metro (Windows Phone 7-esque), and Desktop (Windows 7-esque). You can switch between the two at will.

This is in contrast to Apple's obvious approach, which is to slowly blend the two without a real switch mechanism. Microsoft is just jumping ahead of where Apple is undeniably heading. Whether it's premature or not is the gamble.

But I HAVE used Win8 builds on both touch and desktop platforms. Those of you who are saying MS should just put Windows Phone 7/8 on tablets are going to have a good laugh soon when you see metro Win8 on one.

I'd bet that 2% Windows revenue decline still meant an increase in Windows net profit seeing how much of the R&D is already accounted for. Still, I think it's not something we've seen before with MS and may be the start of a long and unfruitful trend.

I skimmed over a few of these stories as these stock market analyst types tend to give me a headache.

From what I can tell though, they still had growth in the Windows division, just 2% less growth compared to the previous year.

I find it surprising that there is still growth occuring in the PC market at this point.

People need to realize Win8 isn't just Win7 on touch devices. There's two distinct user modes: Metro (Windows Phone 7-esque), and Desktop (Windows 7-esque). You can switch between the two at will.

This is in contrast to Apple's obvious approach, which is to slowly blend the two without a real switch mechanism. Microsoft is just jumping ahead of where Apple is undeniably heading. Whether it's premature or not is the gamble.

But I HAVE used Win8 builds on both touch and desktop platforms. Those of you who are saying MS should just put Windows Phone 7/8 on tablets are going to have a good laugh soon when you see metro Win8 on one.

That is not an apt comparison. Metro is webcode-based UI much like Chrome OS but using Internet Explorer. Apple uses a proper Darwin OS for the base, with frameworks and foundations that work on both Mac OS and iOS as needed, and both UIs are built using Cocoa, just that one uses a new form appropriately titled CocoaTouch

Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"

If I was the CEO of Microsoft, I'd realize that success with the iPad did not come from trying to cram OS X onto it. They used iOS, and that's why Microsoft needs to put their Windows Mobile 7 OS on tablets. I think the Metro GUI is a great for post PC devices. Having said that, I drank too much Apple Kool-aid and I'm staying with iOS devices. Android, Palm, Blackberry, and Microsoft anything can kiss my ass.

And how can they differentiate themselves from Apple? Just another iOS or Android wannabe perhaps? This way they can draw strength from their main arsenal: Windows. The question is not is it right, the question is how they can make it as good and enjoyable to use as iPad.
If they can do that it will be a Microsoft reborn. If they can't it will be a nail in the coffin.

From what I can tell though, they still had growth in the Windows division, just 2% less growth compared to the previous year.

No, revenue for MS windows shrank. With Microsoft already earning more money (through patent licensing) on Android than selling Windows Mobile, it won't be long before overall Microsoft revenues and profits are shrinking.

People need to realize Win8 isn't just Win7 on touch devices. There's two distinct user modes: Metro (Windows Phone 7-esque), and Desktop (Windows 7-esque). You can switch between the two at will.

This is in contrast to Apple's obvious approach, which is to slowly blend the two without a real switch mechanism. Microsoft is just jumping ahead of where Apple is undeniably heading. Whether it's premature or not is the gamble.

I think that's an overreach in describing Microsoft's versus Apple's approach. One could say that Apple is the one who jumped ahead by applying the base OS elements to mobile devices, but created a new UI and paradigm that better matched those devices. With Lion, Apple obviously selected some elements from iOS, including touch interface elements and stateless/stateful management of apps and documents, and applied those back to the desktop OS. MS seems to have learned the wrong lessons from their own disastrous tablet strategy, which is to again try to make an all-you-can-eat buffet platform. The only thing they changed is to add a touch-based UI option. Mobile devices need a lot more than that to be effective at their tasks. Power management, responsiveness, usability (not just a touch UI), and a whole different user interaction model are what has made the iOS devices stand out.

If you view tablets as PCs and you're Microsoft, then I hope you enjoy using UIs full of crowded, tiny button bars, anachronistic mechanisms like scroll bars and right-click. And having to press ctrl-alt-del.

If you view tablets as PCs and you're Microsoft, then I hope you enjoy using UIs full of crowded, tiny button bars, anachronistic mechanisms like scroll bars and right-click. And having to press ctrl-alt-del.

"These numbers are good. The question is, what will make Microsoft break this range in which it is stuck, between $25 and $28?" said Trip Chowdhry, managing director at Global Equities Research. "I don't see these numbers giving an indication that the stock is going to break away."

Why would anyone want them to break out of the $25 to $28 price range. There stuck in a pattern of alternating between the 2 figures about 4 times a year, so you buy at $25 and sell at £28. Do this 4 times a year and you make a 57% profit, it's a nice reliable stock to buy. Apple on the other hand is more awkward, you know that you can make more money with it, but you never know when the dips are going to end and when the highs are going to be to sell before the next dip. With Microsoft buy at $25, sell at $28 easy money.

Quote:

Originally Posted by matrix07

And how can they differentiate themselves from Apple? Just another iOS or Android wannabe perhaps? This way they can draw strength from their main arsenal: Windows. The question is not is it right, the question is how they can make it as good and enjoyable to use as iPad.
If they can do that it will be a Microsoft reborn. If they can't it will be a nail in the coffin.

To me Win8 on a tablet looks perfect. The iPhone was perfect because Apple recognised a phone is not a PC. MS seem to have recognised that a tablet isn't a phone and to me that is why Win8 on a tablet looks far better than the iPad. However both of them are completely screwing up with the desktop. Win8 doesn't need live tiles and why does Lion have a grid of app icons, it just reminds me of Windows 3.1. Seriously desktops, tablets and phones arn't the same thing. Why do these companies insist on trying to make them all the same.

To me Win8 on a tablet looks perfect. The iPhone was perfect because Apple recognised a phone is not a PC. MS seem to have recognised that a tablet isn't a phone and to me that is why Win8 on a tablet looks far better than the iPad.

I love the idea of a tablet that can morph into a full computer when required. Heck, I'd love to be able to dock my iPhone into a monitor and have full OSX.

However the theory that most subscribe to at the moment is that it isn't possible, and I don't know if Microsoft have enough fairy dust left to pull something like that off.

People need to realize Win8 isn't just Win7 on touch devices. There's two distinct user modes: Metro (Windows Phone 7-esque), and Desktop (Windows 7-esque). You can switch between the two at will.

This is in contrast to Apple's obvious approach, which is to slowly blend the two without a real switch mechanism. Microsoft is just jumping ahead of where Apple is undeniably heading. Whether it's premature or not is the gamble.

But I HAVE used Win8 builds on both touch and desktop platforms. Those of you who are saying MS should just put Windows Phone 7/8 on tablets are going to have a good laugh soon when you see metro Win8 on one.

But why would you need to switch between the two at will?

Why would you want to switch to Metro on a desktop computer, and why would you want to switch to classic mode on a tablet??

I wouldn't say Apple is "blending" because their laptops and desktops (with the magic trackpad) actually have a giant multitouch trackpad, and Apple is using that mostly for gestures and such. They are just taking features from iOS that they think would work well on their Desktop and Laptop hardware. Apple is not really taking anything from the desktop and adding it to iOS, either.

Eventually Apple will have a touch / desktop product that redefines desktop/laptop computing like they have done so much in the past. Some kind of product with both a touch screen and traditional input system that blows away what Windows tablets have ever offered. This product would be great with Lion or more likely the next Mac OS X product which adds even more touch functionality, whereas Microsoft has no ability to redefine the definition of hardware - they can only make a stupid OS that switches between two UI modes that work on existing hardware.

I love the idea of a tablet that can morph into a full computer when required. Heck, I'd love to be able to dock my iPhone into a monitor and have full OSX.

However the theory that most subscribe to at the moment is that it isn't possible, and I don't know if Microsoft have enough fairy dust left to pull something like that off.

It's possible, it's just problematic. For starters you have to balance the performance and power of he device far more as an ultraportable PC than as a tablet. No way can you run full Excel on windows-8 in 256Mb of ram. Battery life will thus suffer.

Second controlling a desktop OS application requires a desktop OS UI paradigm - or some horrible 'translation layer' that dumbs down the touch interface into a proxy for a mouse.

The former maybe has a technical solution, the latter definitely doesn't.

Yes but Win-7 is having a far better launch than Vista, and a big chunk of MS' business is predicated on the idea that it can get people and businesses to pay for OS upgrades.

The fact that W-7 revenues are flat at this level of OS penetration is a bit of a concern for MS.

That's a very simplistic view though. You have to also take into account the large number of business that have Windows licenses rather than actually buying a copy. Irruspective what those companies do the revenue will be flat, they could upgrade or not upgrade the revenue will still be flat.

The consumer side of the market generally get an OS with a new machine and as everyone already has a machine, the growth in that area is going to be flat.

I have visions of this site being run by a bunch of 20 year old, socially retarted iFan nerds that foam at the mouth in a negative way if anything makes Apple look bad or in a postive way if Microsoft looks bad.

Your post leads off with the one negative area in the earning call. The rest is ALL POSTIVE, yet you would NEVER know from your post.

On a more un-biased and more popular tech blog site you get real information.

Look, I like Apple more than Microsoft as well and realistically, you can't expect a fair and balanced story from an Apple fan-site, but seriously. Microsoft is doing fine. Relax with colourful negative language.

They could have had more revenue if they changed their price policy. Windows prices are too high! That's why there are so many pirated copies. If the prices were lower they would get less cash from each copy but I believe they would sell a lot more, even to us Mac users that need Windows for some games or apps unavailable for Mac.

J
Your post leads off with the one negative area in the earning call. The rest is ALL POSTIVE, yet you would NEVER know from your post.

<scarcasm>

Yep, it's ALL positive except the slight decline in Windows revenue. This for example is great news - the online division's losses continue to grow at an excellent rate.

"Despite a 16.25 percent increase in sales, Microsoft's online services unit, which has bled almost $6.5 billion dollars over the past three years, posted a loss of $728 million, compared to a loss of $688 million a year ago."

Look, I like Apple more than Microsoft as well and realistically, you can't expect a fair and balanced story from an Apple fan-site, but seriously. Microsoft is doing fine. Relax with colourful negative language.

I would expect them to not cover Microsoft at all really. I come here for Apple news. I use and like products from both companies.

Yep, it's ALL positive except the slight decline in Windows revenue. This for example is great news - the online division's losses continue to grow at an excellent rate.

"Despite a 16.25 percent increase in sales, Microsoft's online services unit, which has bled almost $6.5 billion dollars over the past three years, posted a loss of $728 million, compared to a loss of $688 million a year ago."

Thanks for posting that. For all the years MS has been investing more in UI research than any other software company they're put out only two truly innovative things, and Metro UI is one of them (the other being Ribbons).

It feels wrong every time I say it but I agree about Metro. It looks attractive, distinctive and seems to have some fundamental advantages over its rivals in how it presents information.

It took them decades but MS has finally gotten serious about UI design.